CATHCART V. COMMISSIONER
36 T.C.M. 1321 (1977)
NATURE OF THE CASE: This was a dispute over the deductibility of points charged against a
mortgage.
FACTS: Cathcart (D) got a net proceeds mortgage loan. The face amount was $57,600 with a
7% rate for 29 years. Ds got $55,039.92 in actual proceeds at closing. The $2,560.68 was
used to pay for various fees and services and also included a $1,086.60 charge for points
against the loan. D argued that these points, as charged, were in fact interest charges
against the loan and deducted them in the tax year they were incurred. The IRS claims that D
must prorate the points over the life of the loan.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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